### E OF XAS

L?aSrnN ‘11, TEXAS

June 13, 

### 1960

Honorable Robert S. Calvert Opinion 

### No.W-845 Comptroller of Public Accounts Capitol Building Re: Questions concerning the Austin, Texas permit provisions of the Soeclal Fuels TaxLaw. Art. 10.11(l) chapter 10, Ii. B. 11, 3rd C. S. 

### 56th Leg.., as it pertains to Dear Mr. Calvert: “User Permits"

.You have requested an opinion on two questlona concerning the Special Fuels Tax Law;(Art. 10.11(l) Chapter 10, Ii. B. 11, 3rd C. S. 

### 56thLeg.). ‘iYourfirst question is whether a “user” whomaintains a fuel storage In Texas and purchases special fuels in bulk,quantities predominantly for delivery into the fuel .supply tanks of hi8 motor vehicles, andwhoalso operates a~numberof the motor vehicles in interstate commerce, nece.ssitatlng the importation of special fuels in the fuel supply tanks of such vehicles, is required to obtain a non-bonded user permit as well as a bonded user import permit.

Answering this question requires a brief examlnatlon ofthe purpose and scope of the Special Fuels Tax Act. Article 10.03 of the Act Imposes a tax upon the use of special fuels for the propulsion of motor vehicles upon the public highways of this State. Revisions of the Act enacted by the Third Called Sessionof the 

### 56thLegislature were designed to remove the collection of the tax from the service station level to the wholesale supply level. Ninety per cent or more of the special fuels sold in Texas are used for nonhighway purposes. Since the tax Is laid only on fuels uSed for highway purposes, the collection system Is aimed at reducing to a minimum the amountq tax refunding. This is accomplished through a System of permit controls. This system: operates as follows: Awholesale supplier Is required (1) to collect the tax on all deliveries to licensed nonbonded retail dealers and bulk user8 (such as truck and bus lines) whosepurchasers are predominantly for delivery into, the fuel supply tanks of motor vehicles; (2) to sell tax free to licensed and bonded retail dealers andbulk users whose purchases are predominantly for non-highway use, andwhoare required to pay taxes directlyto the State only on the fuelHonorable Robert S. Calvert, page 2 Opinion No. 

### W-845

sold and/or delivered into fuel supply tanks of motor vehicles; and 

### (3)to sell tax free to exclusive non-highway consumers whofurnish a signed statement that none of the special fuels so purchased will be delivered into fuel tanks of motor vehicles.

”User”, as contemplated bythe Act, means every person whodelivers any special fuels into the supply tanks of motor vehicles ownedor operated byhim, and anyperson whoimports special fuels into this State in the fuel supply tanks of motor vehicles ownedor operated by him. Article 10.11(l) provides, in so far as pertinent:

“Upon approval of an application and approval of bond if a bond is required, the Comptroller shall Issue to the applicant a permit authorizing himto engage in the kind of business or other operations or to perform the functions set out in and authorized bythe class of permit so issued

. . . Such permit shall be of the kind and classifications as set out herein below:

. . . .

“NON-BONDED

USERPERMITS.

‘Authorizing persons whose purchases of special fuels are predominantly for delivery bytheminto the fuel supply tanks of motor vehicles ownedor operated bythemto act as users. ”RONDED

USERPERMITS.

“Authorizing persons whose purchases of special fuels are not predominantly for delivery by theminto the fuel supply tanks of motor vehicles ownedor operated by themto act as users.

“BONDED

USERIMPORT

PERMITS.

“Authorizing persons whoimport special fuels into this State in the fuel tanks of; motor vehicles ownedor operated bythemto act as users.” Awholesale suppli;er maysell only to those holding permits as bonded or non-bonded users or dealers. Heis required by Article 

### 10.03(3)to collect the tax on each gallon of special fuels dellvered to non-bonded users. Noprovision of the law requires or authorizes the supplier to collect theHonorable Robert S. Calvert, Page 

### 3 Opinion No. 

### WW-845

tax from any bonded user, or any person operating only in the capacity of a,bonded user.

Abonded user import permit authorizes the holder to import special fuels in the fuel supply tanks of his motor vehicles. Article 10.03(5) requires himto report andpay the tax to the State on each gallon so Imported and consumedin the operation of, the vehicles upon the Texas highways. However, Article 10.13(5) appears to limit the reporting required to bemadebythe user-importer to special fuels used In interstate vehicles only, andnot -that used in vehicles operated entirely In intrastate commerce.

Article 10.11(l) authorizes a supplier to operate aa a dealer or user without securing a separate permit, and authorizes a licensed dealer to operate as auser without obtaining a separate permit. Nocomparable provision authorizes a bonded user-importer to.,act a8 a non-bonded user without obtaining a separate Permit.

For the foregoing reasons, It is ‘cle,ar that If a user is maintaining storage tanks in Texas andpurchasing special fuels from suppliers In bulk quantities predominantly for delivery Into fuel supply tanks of his motor vehicles (thereby qualifying himas a non-bonded user), and,ls also operating a numberof motor vehicles in interstate commerce (which requires himto secure a bonded user-import permit), such user is required to obtain both a non-bonded user permit and a bonded user import permit.

Your next question concerns the provisions of Article 10.08, which provides as follows:

“OPTIONALCOMPHTATION OFTAX.

“In the event the tax herein imposed on special fuels imported into this State in the fuel supply tanks of motorvehicles andthe tax on”:special fuels used In mototivehicles iownedor’%perated by licensed supplier or other persons acting as users can be more accurately determined on amileage basis (that IS by determining and using the total numberof miles traveled andthe total gallons of fuel~consumsd), or In ease It is more practicable to so determine the tax, the Comptroller is hereby authorized to approve and adopt such basis.”Honorable Robert S. Calvert, ,Page4 Opinion No. 

### WW-845

vise: In reference to the foregoing provision, you ad-

“The Comptroller has construed the above 10.08 to be, and clearly Intended bythe Article Legislature to be, an exception to Article 10.03-(5) providing that the tax shall be paid to the State on each gallon delivered by auser into the fuel supply tanks of motor vehicles, andto Article 10.14- 

### (3)penalizing the filing of a claim for tax refund on any special fuels delivered into fuel supply tanks of motor vehicles. Andthat upon adoption by the Comptroller of the mileage basis authorized in Article 10.08 for determining the amountof tax dueTexas on special fuels delivered into motor vehicles in Texas andthereafter used partly on the Texas hlghwa s andpartly In other States, the said Article 10.0ii will supersede and control over the other Articles cited herein.” Article 10.08 authorizes the Comptroller to measure the tax due from a given user on amileage basis if that systemis more practicable andwill more accurately determine the amount’of tax due. In case the Comptroller elects to use this procedure, the provisions of Article 10.03(5) that the tax Is to be paid on each gallon delivered by a user Into the fuel supply tanks of motor vehicles is superseded.

In cases where auser has paid taxes upon special fuels delivered into fuel supply tanks which travel in lnterstate commerce, an anomalous situation arises. Article 10.14 authorizes a refund of taxes paid on special fuels consumed In non-highway use. Howevers Section 

### (3)of Article 10.14 specifically provides that any dealer or user whofiles a claim for refund of the tax paid on any special fuel delivered into the fuel supply tank of ’s motor vehicle shall forfeit the right to the entire amountof the refund claim filed. TheAct imposes a tax only upon special fuels used on Texas’highways, therefore It is apparent that gas used on hlghways~of other states is used for a“‘non-,hlghway” purpose within the meaning of the refund provision. Consequently, to give effect to the plainintent of the Legislature that auser Is entitled to a refund on all special fuels used for non-highway purposes requires thatxctlon (3) of Article 10.14 be disregarded to the extent that it Indicates that no refund maybe had for taxes paid on special fuels subsequently used,in motor vehicles on highways of other ‘states. Auser is entitled to a refund of taxes paid **on** special fuels used In motor vehicles out of state and may make applicationHonorable Robert S. .Calvert, Page 5 Opinion $0. ~~-845

therefore In the form prescribed byArtiole 10.14. However, this’ does not meanthat Article 10.08, wheninvoked by the Comptroller, supersedes any of the provision8 of Article 10.14, for the right to refund exists regardlees of whether the amount of tax due is figured on amileage basis, ors in somemanner, bythe amountof gallons actually used on Texas highways. (In this regard, It should be noted that the mileage formula for computing the tax maybe used only where It will most accurately andpractioally reflect the actual amountof gallons used for highway purposes. Wherea certain numberof gallons are delivered to a user, all of which are used onTexas highways, the tsx must be collected on each such gallon; in such a case, the Comptroller has no discretion to employ the mileage formula.) SUMMARY AspecLa1 fuels “u8er” who.i8 maintaining storage tanks In Texas andpurchasing special fuels from suppliers in bulk quantities predominantly for delfvery into fuel supply tank8 of his motor vehicles, and.18 also operating a numberof the motor vehicle8 In Interstate commeroe, necessitating Importation of,,epecial fuels in the fuel supply tank8 

### of such vehicles, Is r’equired to obtain both a non-bonded user permit and bonded user import permit.

Article 10.08 of,the Special .?uel8 Tq Act, when Invoked by the Comptroller , supersedes the provision of Article 10.03 (5) that the u8er pay the tax on eaah gallon of special fuels delivered into the fuel supply tanks of his motor vehicle. Article 10.14(3) does not prevent a U8er from seauring a refund of taxes paid oti ,Bpeci,al fuels delivered into the fuel supply tank8 of motor vehicle8 and used on the highways of other states. Very truly yours, WILLWILSOR Attorriey General OSTexas

APPROVED: 

# RYw-4Lt ’ RMck N. P

ricer OPIMIGN

COMMITTEE: Assistant W.V. Geppert, Chairman JNP:jp J. Arthur Sandlin Riley *EugeneFletcher Phoclons Park, II Marvin Ii. Brown, Jr. REVIEWED FORTHEATTORNEY

GENERAL By: Leonard Passmore